Competition Council: Romanian Notaries, 14x More Expensive Than German Counterparts

Alina Toma Vereha (Tradus de Andrei Năstase)
Ziarul BURSA #English Section / 30 octombrie 2009

The price of the services provided by notaries in Romania, benchmarked as the ratio between referenced fees and the average salary in the country, is 14 times more than in Germany, 7 times more than in Portugal, 6 times more than in Austria or Spain, 5 times more than in France and 4 times more than in Belgium. This is the conclusion of an analysis conducted by the Competition Council on the Romanian real estate market and related services.

Upon presenting the analysis yesterday, Competition Council Chairman Bogdan Chiritoiu also explained why Romania had some of the most expensive notaries in Europe: "The report indicates that Romania has only 2,000 notaries to 22 million inhabitants. Notarial services in Romania are characterized by a high degree of regulatory control, compared to the European average. Regulations limit the supply of notarial services by the fact that the National Union of Notaries Public decides on an annual basis the number of persons allowed to enter this profession. It is also this system of regulatory control that arbitrarily defines prices, outside the normal mechanism of interaction between demand and supply."

The Competition Council will submit the report to the Government and Parliament of Romania and recommend changes to the legal framework so as to remove any limitations on the number of notaries public and the set of minimum notarial fees applicable to property transactions. "The notarial profession is regulated by law, including the set of minimum fees. The Competition Council can only take it upon itself to attempt to persuade authorities and notaries to give up on the regulated minimum fees and seriously consider the deregulation of the market for notarial services. According to our estimations, free competition on this market can lead to important savings, reaching as high as 30 per cent of the current prices," Competition Council Chairman Bogdan Chiritoiu added.

During a press conference yesterday, Competition Council officials further explained that a first step to deregulating the profession of notary public could be a 15 per cent cut in the regulated minimum fees by using standardized contract templates, which would decrease the total fee by the price of the service of drafting the respective contracts. Chairman Chiritoiu estimated that this change would generate countrywide savings in the range of 15-30 million EUR.

The Competition Council will notify the National Consumer Protection Authority (ANPC) as to the precariousness of the information that banks make available to prospective customers as to the notaries whom banks have already selected to notarize mortgage loans and particularly the precariousness of the information concerning their fees of the selected notaries.

"We are reviewing all the liberal professions and have already found competition issues with the regulated professions. Some of the liberal professions are more influential than others, and they do have minimum fees regulated by law. The jurisdiction of the competition authority is limited in such cases and I am sure that it will take an awful lot of time to convince the Members of Parliament, many of whom are of the legal profession, to accept the benefits of deregulating the market for notarial services. Practically, we are asking notaries to work more for less money," Chairman Chiritoiu concluded.

According to the Competition Council report, the market for cadastral services is highly competitive, in the absence of regulated fees and any hindrances against those wishing to join the business. The same is also valid for the realty market, although some price inflexibility does exist. The property valuators are also a competitive profession.

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